> Warren Buffett Blog: 2020

Saturday, November 14, 2020

Berkshire does a Stock Buyback

Berkshire reported share buybacks of about $9 billion, a total that exceeds any full-year amount in Berkshire's history. The Q3 repurchases were also a big jump from the $5.1 billion in Q2 2020. At the time, that was more than double the prior quarterly record of $2.2 billion in Q4 2019 and a shift from slower stock repurchases of $1.7 billion in Q1.

Berkshire loosened rules for Buffett to buy back shares in 2018. With Berkshire steadfastly cautious on M&A in recent years, investors have been clamoring for more repurchases.

But as recently as May, Buffett argued repurchases weren't more attractive than other money moves, saying the stock price had not fallen to "where it really feels way better to us than other things, including the option value of money, to step up in a big, big way."

Now, the latest buybacks cement a major reversal in Buffett's investment strategy, which previously shunned hefty repurchases. Year to date, Berkshire Hathaway has bought back $16 billion in stock.

Meanwhile, Berkshire Hathaway was a net buyer of other stocks, adding $4.8 billion to its closely watched portfolio. That followed Q2's $13 billion in stock sales, the most in more than a decade, as Buffett cashed out all his airline stocks.

With the surge in buybacks and other stock purchases, Berkshire's cash pile dipped to $145.7 billion from a record high of $146.6 billion in Q2.

Thursday, August 20, 2020

Berkshire buys shares in Barrick Gold

Berkshire announced a new  20.9 million-share stake in Barrick Gold, worth $564 million. The investment, disclosed recently, gives Berkshire a 1.18% stake in Barrick and makes it the 11th largest shareholder.

Barrick Gold Corp. CEO Mark Bristow praises the new investment from Warren Buffett's Berkshire Hathaway as a “significant step” for his gold mining company and the industry. "It's the ultimate privilege to have Berkshire Hathaway as an investor in one's company and something that I've been aspiring to,” Bristow told FOX Business exclusively. “We hope it’s not the end.”

Barrick Gold shares has gained around 62% this year.

In 2005, Buffett complained gold was “something that gets dug out of the ground in Africa“ and has “no utility.”

Munger once famously said “civilized people don’t buy” gold.

While Buffett's team didn't disclose the reason for its investment, its possible the decision was made by Todd Combs or Ted Weschler, investment managers who are potential successors at Berkshire.

Saturday, April 25, 2020

Warren Buffett reduces stake in Delta and Southwest Airlines

Berkshire Hathaway has sold about 18% of its stake in Delta Air Lines and 4% of its holdings in Southwest Airlines this week, as the corona-virus pandemic drives the airline industry into perhaps its a nightmare scenario.

According to regulatory filings, Berkshire sold nearly 13 million Delta shares for about $314 million and roughly 2.3 million Southwest shares for about $74 million.

Watch Live Saturday May 2, 2020 - Berkshire Hathaway Annual Shareholders Meeting 2020

Live Event begins May 2nd at 4pm Eastern Time - USA

*UPDATE - The live event is on Saturday May 2nd, 2020

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Monday, April 20, 2020

Should Board Members in companies be compensated generously ?

Over the years, board “independence” has become a new area of emphasis. One key point relating to this topic, though, is almost invariably overlooked: Director compensation has now soared to a level that inevitably makes pay a subconscious factor affecting the behavior of many non-wealthy members. Think, for a moment, of the director earning $250,000-300,000 for board meetings consuming a pleasant couple of days six or so times a year. Frequently, the possession of one such directorship bestows on its holder three to four times the annual median income of U.S.
households. (I missed much of this gravy train: As a director of Portland Gas Light in the early 1960s, I received $100 annually for my service. To earn this princely sum, I commuted to Maine four times a year.)

And job security now? It’s fabulous. Board members may get politely ignored, but they seldom get fired. Instead, generous age limits – usually 70 or higher – act as the standard method for the genteel ejection of directors. Is it any wonder that a non-wealthy director (“NWD”) now hopes – or even yearns – to be asked to join a second board, thereby vaulting into the $500,000-600,000 class? To achieve this goal, the NWD will need help. The CEO of a company searching for board members will almost certainly check with the NWD’s current CEO as to whether NWD is a “good” director. “Good,” of course, is a code word. If the NWD has seriously challenged his/her present CEO’s compensation or acquisition dreams, his or her candidacy will silently die. When seeking directors,
CEOs don’t look for pit bulls. It’s the cocker spaniel that gets taken home.

Despite the illogic of it all, the director for whom fees are important – indeed, craved – is almost universally classified as “independent” while many directors possessing fortunes very substantially linked to the welfare of the corporation are deemed lacking in independence. 

Not long ago, I looked at the proxy material of a large American company and found that eight directors had never purchased a share of the company’s stock using their own money. (They, of course, had received grants of stock as a supplement to their generous cash compensation.) This particular company had long been a laggard, but the directors were doing wonderfully.

via Warren Buffett Shareholder letter 2020

Monday, April 6, 2020

Importance of not putting all your eggs in one basket

Since 2011, we have owned Lubrizol, an Ohio-based company that produces and markets oil additives throughout the world. On September 26, 2019, a fire originating at a small next-door operation spread to a large French plant owned by Lubrizol.

The result was significant property damage and a major disruption in Lubrizol’s business. Even so, both the company’s property loss and business-interruption loss will be mitigated by substantial insurance recoveries that Lubrizol will receive.

But, as the late Paul Harvey was given to saying in his famed radio broadcasts, “Here’s the rest of the story.” 

One of the largest insurers of Lubrizol was a company owned by . . . uh, Berkshire.

In Matthew 6:3, the Bible instructs us to “Let not the left hand know what the right hand doeth.” Your
chairman has clearly behaved as ordered

Monday, March 16, 2020

People are strange. They should want stock market to go down. They should want to buy stocks at a lower price.

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We are going to be buying stocks on balance. We would much rather buy stocks when prices are lower